Getting a Nordstrom buyer to be your senior vice president of
merchandising when you haven't even started your company seems
tricky. Getting an entrepreneur who just sold his company to
Microsoft to invest seems impossible. But MacGyver's got
nothin' on Nick Swinmurn. "[I did this] at a time when
anything seemed possible," says Swinmurn, who got the idea for
his shoe dotcom after a frustrating quest for shoes at the mall.
"It was an idea that made sense."

Posing as a recruiter for a small brand looking for a
merchandising guru, Swinmurn persuaded Nordstrom buyer Fred Mossler
to meet with him. "Then I spilled the beans on the plan,"
he says. "He thought it was a good idea and ended up coming on
board."

Mossler's background and contacts jump-started the San
Francisco company, says Swinmurn, and also persuaded Tony Hsieh to
use some of the $270 million he earned from selling LinkExchange to
Microsoft in 1998 to fund Swinmurn's idea. It took some
convincing, however. "I almost deleted his e-mail," says
Hsieh, now Zappos.com's CEO, of Swinmurn's initial pitch.
"On the surface, it seemed like the quintessential poster
child for a bad dotcom idea."

Learning the market size was $40 billion, and $2 billion was
already being sold via mail order catalogs, helped. "Over
time," says Hsieh, "I saw there was a lot of potential
for the company." Potential indeed: They've achieved $32
million in sales, with $65 million projected for 2003.

Offering free expedited shipping (even on returns) and changing
the name from ShoeSite to Zappos helped the pair distinguish
themselves in an otherwise crowded 1999 dotcom marketplace. With a
careful eye toward stellar customer service, they're shooting
for sales of $1 billion-which isn't far-fetched, considering
they closed a deal with Wells Fargo on a $6 million revolving
credit line in June. "We're focused on being not just the
best footwear company," explains Hsieh, "but the best
e-commerce company." -Karen E. Spaeder

Online Exclusive

Learn how you can become a
young millionaire in our Q&A with author and Young
Entrepreneurs Network founder Jennifer Kushell.

Success
SecretsEntrepreneur: You weren't the only ones to come
up with the idea for a shoe site, but you're one of the most
successful and well-known. Why?Nick Swinmurn: It's the little things, like our
competitors stuck with names that were some derivative of
"shoes." Also, we met with big, traditional VCs, but we
weren't appealing to them at the time. It turned out to be good
in the long run because in working with Tony, instead we put money
into making things as efficient as possible rather than throwing
money into big mistakes.

Tony Hsieh: We're [driven by] having the best
possible customer experience-and that goes to our decision to
warehouse our own shoes. If you go to our site, our top brands have
200 to 300 styles-a good selection. But we also really focus on
what happens after we get the credit card [number] from the
customer.

On day one of testing Kevin Plank's moisture-wicking
T-shirts on the football field, fellow University of Maryland
players were laughing and poking fun at each other, amused by the
shirts' lingerie-like material. "Day Two, they were
scratching their heads," Plank says. "Day Three, they
were all saying, 'Hey, can I have one?'"

It's that kind of enthusiasm that launched Plank's
Baltimore company, Under Armour Performance Apparel, which started
in 1996 as nothing more than a way to keep athletes dry and
comfortable under their gear. The company is now set to nearly
double its 2002 sales of $55 million.

It also helped that Plank had contacts in the entertainment
industry. The first big break was a product appearance in the 1999
film Any Given Sunday, before which Plank took out a $25,000 ad in
ESPN magazine. "We took a big gamble," says Plank, who
initially financed his venture with $20,000 of his own cash,
$40,000 in credit cards and a quarter-million-dollar SBA loan.

Now in 4,500 retail stores nationwide and the official supplier
for the NHL, MLB and other leagues, Plank's apparel line is
doing more than just outlasting a day on the field.
-K.E.S.

Success
SecretsEntrepreneur: How do you stay competitive when large
brands are coming out with their own lines of performance
apparel?Kevin Plank: We can only be concerned about ourselves and
the job that we do. At the same time, we're very aware of them.
At Under Armour, we've devised a way to explain that
there's something better than wearing a cotton T-shirt.
It's about educating consumers that there's this thing
called performance apparel. The industry of cotton is the bigger
competitor.

Entrepreneur: What were some of the things you did
when you got your SBA loan?Plank: The first thing was to pay back all the people
I'd borrowed money from. [Then it was] investing in the
product. We'd decided our partners were going to be the biggest
partners out there. I thought, "In order to compete, I'm
gonna need some big friends." We got the type of vendors and
partners who could write the big checks.

Entrepreneur: Any words of advice for
entrepreneurs who have a breakthrough product? Where do they
begin?Plank: The first thing is that you've got to believe in
your product. There are some long days, some lonely days, days when
there's not a dime in the checking account. It's those
fighting-through moments. I got some good advice early on: You need
to find out if your product will sell. I found myself spending the
first four or five months going through the legal process. But
it's about being the first to market, being faster than the
other guy. If you're late, it's not going to matter who
carries the legal document.

Anybody can come up with a business idea. finding a great idea
in the midst of a business failure-that takes the unique talent of
someone like Karen Belasco Staitman. This serial entrepreneur
started a mail order catalog business in 1994, selling specialty
gift items. The venture didn't work out, but one item did:
giant, chocolate-dipped fortune cookies with personalized messages
inside, perfect for weddings, birthdays and other special
occasions. "The cookies were very popular," she says.
"So I just started peddling the cookies."

She launched her Good Fortunes business in 1995 and was inspired
again in 2001 to start Corporate CandyWorks, a licensing venture
with M&M/Mars to create personalized color candies for the ad
specialty market. Both businesses coexist in her Canoga Park,
California, family-friendly facility, where this mother of three
created an on-site room for her children and her employees'
children to hang out. "I know every one of my employees'
children," she says. "They come here; they play with my
kids. That happens all the time."

Belasco Staitman expects Good Fortunes and Corporate
CandyWorks' combined revenues to hit $8 million this year. And
things are set to explode in 2004. Belasco Staitman has just signed
a deal with a huge e-tailer to offer her products online, and has
expanded her factory by 500 percent, which promises to pump sales
to $35 million in the next three to four years. Still, she
hasn't forgotten the lessons she learned in her failed
start-ups. "I'm truly the eternal optimist," says
Belasco Staitman. "I always think I can do it, and I always
find a way to do it." -Nichole L. Torres

Success
SecretsEntrepreneur: You focus a great deal on balancing
your family with your work life, and you've been able to build
your company and still be a mom. How do you strike a balance?Karen Belasco Staitman: When I started the company, I just
got married and I was pregnant by the time we moved into this
facility. My mom always told me that family always has to come
first, and it truly does. And she said, since you're going to
be in the factory, you need to build a place for the child to be
with you because it's important that your children are there
with you. At first, that was relatively easy. I kept my oldest Jake
in the office with me, and I would just work phone calls around
when he was sleeping and napping. And then the second one came
along, and the third one came along, and the factory grew bigger,
and we had a playroom in the back. But then I did have to hire
people to help me manage both [areas of my life].

Baby Bedding & e-Learning

If a company as big as OshKosh B'Gosh offers you their
license, you have only one option: Take it. Fortunately for Renee
Pepys Lowe, whose sales and marketing skills had contributed to
much of the success of her mother's infant bedding business,
entrepreneurship was already in the blood when OshKosh B'Gosh
called in August 1998. Knowing that Pepys Lowe's mom was
selling her business, which left her daughter (by then well-known
in the industry) open to new possibilities, OshKosh B'Gosh left
this voice-mail message for her: "We hear you're starting
your own company. Are you interested in the OshKosh
license?"

"I didn't know I was starting my own company,"
Pepys Lowe says half-jokingly from behind an understated desk at
CoCaLo Inc., her $5.3 million Costa Mesa, California, manufacturer
and distributor of children's bedding and accessories.
Nonetheless, it didn't take long for Pepys Lowe to get cozy
with the idea. In January 1999, she started selling a
CoCaLo-designed line of OshKosh B'Gosh products in Babies
"R" Us; Burlington Coat Factory; Buy, Buy Baby; and small
specialty stores nationwide.

Word of the successful OshKosh B'Gosh placements spread to
the makers of Baby Martex and Eurobaby (which CoCaLo no longer
sells), and soon Pepys Lowe and her team were cranking out designs
for the three brands. The acquisition of infant bedding company
Kimberly Grant & Co. in 2002-combined with placements of
Expectations, an exclusive line in Target stores created by Baby
Martex, and the introduction of a CoCaLo line-have left Pepys Lowe
confident that the 18-employee company will bring in $10 million
this year.

And though she gets calls "every day" from potential
licensors, as with everything Pepys Lowe does, it's about
quality, not quantity: "When I do something, I do it the best
I can." -K.E.S.

Success
StoriesEntrepreneur: What did you learn going from being an
employee to being the boss?Renee Pepys-Lowe: I always had my mother to lean on [while
working for her]-that was a big change. A lot of people say it was
the best thing that ever happened to me. At the end of every day, I
guess the scariest part for me is that I'm responsible for
every single person here, [along with] finances, loans... You
really have to take a lot of risks. Like when I got these phone
calls [from licensors]-I did a lot of soul-searching, and I
thought, "Let's just go for it."

Entrepreneur: Will you ever reach a point when
you'll want to stop growing?Pepys-Lowe: I want to have a five-year plan. I don't
want to feel like I'm going to pass this on to my
children-that's too far down the road. Last year when the
Target opportunity came about, I thought, "This is the perfect
segue [to the] next step for us." My philosophy is, if I wake
up every single morning and I want to go to work, then I'm
going to keep doing it. If I get to the point where I'm feeling
burnt out, then I'll need to really look at what I'm
doing.

Ling Chai has no qualms about going against the flow. Take, for
example, her leadership role in the Tiananmen Square democracy
movement, which landed her on the Chinese government's most
wanted list; or perhaps her escape from China to freedom, hidden
inside a cargo crate; or her two Nobel Peace Prize nominations.

All things considered, you might find it surprising that Chai
got her entrepreneurial inspiration as an MBA student at Harvard.
After listening to Chai, it's apparent that her spirit and
resolve are not so much learned as they are core elements of her
very being.

This drive has enabled her to conquer both the political and
entrepreneurial fronts with remarkable results. Chai attended
Beijing University for her undergraduate degree and Princeton for
her master's degree, but it was being a guinea pig of the
e-learning system at Harvard Business School that sparked her
entrepreneurial flame. "It transformed my educational
experience," says Chai. "I became convinced that every
student in the world deserved to have this e-learning
environment."

Wanting to provide Web-based software products and services for
colleges, Chai founded Jenzabar-loosely meaning "the best and
brightest" in Chinese-in 1998, entering an already competitive
marketplace. Now, five years later, the Cambridge,
Massachusetts-based venture has weathered the dotcom storm,
watching numerous contenders fall by the wayside.

Jenzabar's products and services are used in one out of five
universities in the United States, with some penetration of the
international market. Despite 2002 sales of $50 million, Jenzabar
is not all about the money, Chai says. "Every day, we're
supporting millions of students, faculty and administrators on
campuses to connect and improve their productivity, learning
experiences and communication with each other," she says.
"That gives us a great deal of satisfaction; that's what
brings us back to work."

The rigors of running a successful company have not weakened
Chai's political endeavors, however. Says Chai, "I hope by
further learning leadership skills, I can someday contribute to
rebuilding China." -April Y. Pennington

Success
SecretsEntrepreneur: How did you go from being a political
activist to becoming an entrepreneur? And are there any
similarities?Ling Chai: I have never changed. I was writing a business
plan in China before the Revolution broke out. I was dreaming of
starting the biggest child education center in China. I came over
to this country to get an education at a teachers' college and
go back. China's democracy movement disrupted our life and our
plans; it was calling for us to do something for us for the
country. The calling changed my life for ten years. Once I was able
to escape China and come to this country, I was fortunate to be
able to fulfill my duty for the democracy movement and get
education and live my dream of entrepreneurship through
Jenzabar.

Entrepreneur: You fled China in a crate through
Hong Kong and France and ended up in Harvard Business School? Tell
me about that experience. What was your goal at that point?Chai: My hiding was 10 months, a horrendous journey, and the
last hundred five hours was in a cargo crate, with a cold piece of
bread and a bottle of water. Our goal was to live. It was five days
and four nights, and finally I came to America, the land of
freedom, and started to rebuild a life here-going to school, having
job experiences, and eventually landed in Harvard Business School.
After that I started Jenzabar.

A lot of people dream to live the true American dream. Sometimes
Americans don't appreciate that. But it's such a true
inspiration for people around the world to be able to come to
America and live in a democratic system with free entrepreneurship.
I'm fortunate to live in this dream. In many ways,
Jenzabar's success today had a lot to do with that
inspiration.

The old saying "Three's a Crowd" doesn't apply
to Washington, DC-based IT consulting firm Enlightened Inc. Founded
by three friends who met at George Washington University, three is
the number that makes Enlightened thrive. In 1999, president
Antwanye Ford, vice president Thomas Spann and vice president Andre
Rogers took a leap of faith from corporate jobs to start a
business.

With government contracts a major part of their business,
Enlightened had to adapt when the government restructured after
9/11. Contracts were put on hold and agency funds redirected as
more than 20 federal agencies collapsed into the Homeland Security
Department, leaving Enlightened in the lurch. "It's forced
us to be structured about managing the company," says Ford.
"We don't take as many chances as we did before." A
focus on current customers and investigating opportunities in the
commercial sector are getting them through hard times.

It's the ability to adapt, focus and grow that sets
Enlightened apart from its competition. "We don't let the
grass grow under our feet, "says Rogers. "We're able
to take the ups and downs." With 2003 sales projections
expected to be more than $5 million, Enlightened is seeing the
light. -Amanda C. Kooser

Success
SecretsEntrepreneur: What is the work environment like at
Enlightened?Antwayne Ford: We try to keep a very professional
environment in the way we carry ourselves, the way we try to dress,
the way we like the look and feel of the offices. On the other
hand, we joke with each other and the staff all the time. It's
an environment where people feel very comfortable with each other.
We value our relationships with our employees.

Entrepreneur: Who are your entrepreneurial role
models?Ford: One of mine is my parents. They owned their own
upholstery shop. After school I went to the business and went
upstairs. It was just the two of them, a mom-and-pop-type
environment.

Thomas Spann: I had two influences: My aunt Barbara
Stokes, when I was very young, owned a daycare. I actually was able
to see early on what it took to run a small business and some of
the challenges. More as an adult I was fascinated by the story of
Reginald Lewis and how he was able to get to point where he could
buy Beatrice.

Andre Rogers: My father had a landscaping business, so
that gave me the insights. I think that was where the bug kind of
hit me. I was fascinated about growing the business and how he
could grow the business and make it work better. That translated
even when I had a paper route. I had one of the largest paper
routes in the country.

Entrepreneur: What does the future hold for
Enlightened?Rogers: The future is very bright. This environment is going
to weed out the men from the boys. We came to that conclusion last
year that we were going to survive, no question about it. Right now
we are making structural headway, maintaining relationships in the
commercial sector. I'm salivating over telecommunications
turnaround.

In his youth, David Socha imagined himself as a professional
hockey player. Little did he know he would head up a
$20-million-per-year plush-toy company securing licenses with the
likes of The Coca-Cola Co. and Universal Studios, and producing
product tie-ins with the movie Babe or Nickelodeon's
Dora the Explorer TV series. But flexibility and change are
nothing new to Socha.

In 1994, when this Santa Clarita, California, entrepreneur
realized that a hockey career was not in his future, he started a
mail order catalog business to peddle specialty teddy bears. His
business hit hard times, but with some ad time on a local radio
station and a piece on the local morning news, business
skyrocketed-and gave Socha the opportunity to make teddy bears for
celebrities like Kevin Spacey and Steven Spielberg. Socha heard
opportunity knock again when he began to get requests for a wider
variety of plush toys. That led him to licensing, which has
propelled the company's double-digit growth for the past four
years.

Socha knows he's in a market with a few Goliaths, but
he's proven that his company is a force to be reckoned with.
"We can turn on a dime. We've gotten orders [where] we may
have been the third choice, but because [we'll] jump on a plane
and go to the manufacturing facility in China or meet with a
customer in Dallas," he says, "our company has gotten the
reputation of getting the job done no matter what."
-N.L.T.

Success
StoriesEntrepreneur: What has been the biggest challenge in
getting the company up and running and in running it day to
day?David Socha: I don't want to make it sound too negative.
But there are people out there who don't have the same
integrity or morals and ethics that many people in the business do,
and I think it's a matter of being aware of those people and
protecting yourself from the harm that can come from someone
who's out to hurt you. [It's] being on your toes.

It's a constant battle, not only with our competitors, but
even with people we do business with to make sure that you get in
business with the right people. And I would say the biggest
difficulty is watching out for the people who want to take
advantage of you.

Entrepreneur: Coming into this industry, how do
you compete with the bigger companies?Socha: Really, we win a lot of jobs and a lot of contracts
by default. If I could give small businesses one recommendation,
it's to always be nimble on your feet.

Entrepreneur: Was it that reputation that got you
in the door with those initial meetings with, say, Coca-Cola?Socha: It probably took us three years to get Coca-Cola to
consider us. And that's a part of just being faithful and
knowing who you want to be in business with. That was one we said,
strategically, they're the biggest brand in the world. We want
to do something with them. So every few weeks, every few months,
[we would] just call up. It's truly just the follow-through and
the tenacity to not take no [for an answer].

Randy Eisenman wants to make one thing very clear: He is not a
millionaire. That title is about his business, not him personally.
As founder and president, he has shepherded mobile software
publisher and platform Handango to multimillion-dollar sales and an
impressive 30 percent quarter-on-quarter growth over the past three
years. The only millions he's counting are the more than 6
million customers the Hurst, Texas-based company reaches every
month.

Nobody is born an entrepreneur, but Eisenman took to it at a
young age, opening a fitness-training business in his house at age
16. He got his brokerage license at 19 and headed the VC investment
division of Q Investments before putting his money where his mouth
was and starting Handango in 1999 at age 23, with $18 million that
he'd raised. "Going on business trips, I couldn't even
rent a car. I was too young," he recalls. The tech downturn
could have taken Handango out of the game like so many of its
competitors, but Eisenman led the company through with financial
discipline (including working on $39 card tables) and hard work,
mixed with a dedication to fun.

That determination has helped Handango partner with industry
heavyweights Microsoft, Nokia and Palm and create a growing
international presence. Says Eisenman, "We live and breathe
our mission, which is to create and shape and dominate this
industry and to have fun doing it." -A.C.K.

Success
SecretsEntrepreneur: Where did Handango get its name?Randy Eisenman: After running the business for about a year,
I hired a professional management team. We had been doing business
under the name of GoPDA and PalmCentral, so we decided that we
needed to unify under one brand. We literally had presentations
from six or seven marketing firms and probably looked at over 2,000
different names. When Handango was presented to us, we said
that's the one. We thought it was a fun-sounding name and it
implied something in the handheld market.

Entrepreneur: What is the work environment like at
Handango?Eisenman: You've never seen anything like it. It is a
blast. It is completely open so the 70 or so employees all sit out
in a giant room together. There are no offices. I sit out in the
middle. It is intense and laid back at the same time; it is very
collaborative and team-oriented. It is very fun. There's the
ping-pong table, there's the foosball table, there's the
masseuse that comes to the office on Fridays to give everybody a
massages that wants one. I'm in jeans and a T-shirt today.

Entrepreneur: Who are your entrepreneurial role
models?Eisenman: My parents have been running a family business
that was started in 1950. I look up to them for the kinds of people
they are and the way they live their lives and their values and
priorities. Business-wise the thing I admire most about my parents
is how they treat their employees. It's an absolute family in
their business, and they have unbelievable loyalty with their
employees. That is what sets their business apart, and hopefully a
little of that has rubbed off on me.

Chicken Fingers, Creative Talent & Ring Shopping for Men

Todd Graves went fishing to start his Raising Cane's Chicken
Fingers restaurant locations. No, he wasn't lounging on a
lake-he and co-founder Greg Silvey, now 31, were working 20-hour
days on a salmon fishing boat in Alaska to raise money to open
their first Baton Rouge, Louisiana, restaurant. It was lucrative,
though dangerous, work. "It was insane," recalls Graves.
"But it was incredible because we were up there for our
dream."

That dream was to build a quick-service restaurant near
Louisiana State University that would specialize in chicken fingers
with a signature sauce and sides. A college student at the time,
Graves knew how popular chicken fingers were in other restaurants,
and he saw a niche to bring chicken fingers off the appetizer menu
and into the main course.

Today, Raising Cane's grosses nearly $20 million in annual
sales, but in 1994, Graves and Silvey, now the company's vice
president of IT, listened to a business professor dismiss the idea.
"He said, 'This is South Louisiana. We're known all
the world over for our quality food: Creole, Cajun, seafood. Just
chicken fingers will never work here,'" recalls
Graves.

Their first stabs at getting start-up capital elicited the same
responses from investors-and that's when Graves and Silvey went
to Alaska to earn some start-up cash. Their summer earnings
weren't enough to open the first restaurant, "but [it was]
enough to get some private investors interested," says Graves.
"They said, 'If these guys are this passionate about doing
this chicken finger restaurant, we might as well take a chance on
them.'"

Taking a chance paid off. Graves opened the first Raising
Cane's restaurant in 1996 and has since opened 14 more, all in
Louisiana. With role models like McDonald's founder Ray Croc
and Wendy's founder Dave Thomas, it's no surprise Graves
envisions turning Raising Cane's into an international
franchise giant. Indeed, when people ask him about his long-term
goal, Graves doesn't hesitate: "It's to grow something
truly great." -N.L.T.

Success
SecretsEntrepreneur: Once you opened the doors, did you
still deal with skepticism from the public?Todd Graves: Everybody that came in was like, "Raising
Cane's Chicken Fingers? You've got to be kidding me. What
else do you have?" And I said, "Just try it." And at
Cane's to this day, [whenever] we go into a new market, it is,
"Just try it!"

Entrepreneur: What has been your biggest reward in
starting Raising Cane's?Graves: I can tell you this so quickly because I think about
it so much. My biggest reward is I'm living my dream every day.
And my dream, [which] I say has turned into passion, is to grow
this. People ask me, "Why do you want to grow? What is your
end game?" I say, "I don't have an end game."
Ray Croc didn't have an end game. Do you know how much stock he
died with? Dave Thomas didn't have an end game. It's to
grow something that's truly great. It's recognizing your
potential and your potential in the organization to do something
and do it for the right reasons, because it's special.

No stranger to the entrepreneurial limelight, John Chuang makes
his second appearance as a Young Millionaire this year, after
debuting in 1998 at the tender age of 33 with staffing and
placement services firm MacTemps Inc. Since then, Chuang and his
business have matured.

Capitalizing on the Internet and technology boom of the late
1990s, Chuang's Boston-based temporary placement agency
expanded from providing creative, Web-authoring, and Mac- and
PC-trained personnel to include Web designers, a hot commodity at
the time. When the bust came, Chuang began acquiring struggling
companies, often for purchase prices far below the asking prices.
MacTemps' growth and diversification prompted Chuang to change
the company's name to Aquent, a word created with Greek and
Latin roots that means "not a follower."

"We tend to enter markets where we're the leaders and
offer lots of new services to our clients and our talent,"
Chuang says. Indeed, Aquent has become a major player in
outsourcing creative teams, running the creative service
departments for several Fortune 500 companies, such as Campbell
Soup Co. and Capital One. Companies also use Aquent's
technology and consulting services in systems integration projects.
Changes in the economy and employment could have easily crippled
Aquent, but adjusting to the climate and desired skill sets has
allowed Aquent to rise above the competition and project 2003 sales
of $280 million. Or, as Chuang puts it, "We decided to make
lemonade from lemons."

Chuang can still be seen driving around Boston in the same old
car he's had since college, a trusty 1987 Toyota Corolla-a
clear testament to his modest ways. In fact, employees were once
required to supply their own pens and stay at Motel 6 hotels while
on business trips. And there are still no private offices at
Aquent, not even for "the frugal mogul," as Chuang was
dubbed by close friends and colleagues. "It's easy to
spend money; the trick is earning it," says Chuang.
"Spending money is not very impressive." Cheap has never
looked so rich. -A.Y.P.

Success
StoriesEntrepreneur: You staff a couple thousand people a
day in 17 countries. How did Aquent expand internationally?John Chuang: We essentially just go out there. We have
confidence that our products and services are valuable worldwide,
and we have always thought of ourselves as global, even when we
were small.

Entrepreneur: With all you've accomplished,
what do foresee in the future?Chuang: Our company will be the number-one creative services
company, with a significant amount of Fortune 500 companies as
clients. We'll also be the number-one business in IT staffing.
We are in two really great spaces right now. We're continually
adapting to our marketplace.

Maybe that's why Vadon turned to the Internet-where no one
could peer snootily at him or talk him into buying a $17,000 ring.
The Web site where he found his ring belonged to a brick-and-mortar
jewelry store in Seattle. Though rudimentary, the site gave Vadon
what he needed: "straight talk, like how a jeweler would tell
his friends what to buy," he says.

After the experience, Vadon made it his mission to assist guys
everywhere standing before a glass case, scratching their heads in
dismay. How? Develop an e-commerce site where men could get not
just a chunk of jewelry, but also some help in making a purchase.
In 1999, Vadon took the jewelry store owner to dinner and made him
an offer to buy his business, "and that's how we got Blue
Nile," says the former Bain & Co. executive.

That's also how he assembled a throng of loyal
employees-many of them men jaded by the ring-buying process-as well
as venture capital: "This storefront was doing a quarter
million a month with this basic Web site," says Vadon.
"We went to VCs with this information, and [they] loved it;
they all wanted in on the deal."

With an average order price exceeding $1,000 and a lightweight
product, the $72 million company can afford to offer free
shipping-something that kept Vadon from joining the wasteland of
dotcoms shipping 20-pound bags of dog food.

It's powerful word-of-mouth that makes Blue Nile the envy of
the industry. "Other jewelers get upset because they say
we're giving too much information out [about the
jewelry]," says Vadon, who expects sales of $120 million in
2003. "We're pulling back the curtain and showing the
wizard." -K.E.S.

Success
SecretsEntrepreneur: Why did you decide to buy an existing
business?Mark Vadon: The good reason to buy rather than start from
scratch is that it had an existing supplier base and experts, and
we added experts over time. We went out and hired phenomenal
merchants in the industry who had 10 to 20 [years of experience];
they had the knowledge and contacts. Most of those people are still
here-we've had incredible retention. I took this business very
personally, and a lot of people we've hired are the same
way.

Entrepreneur: How did you get the name Blue
Nile?Vadon: The original business was Internet Diamonds-that was
too brown-paper wrapper. A guy would not want to buy a diamond and
say he bought it from Internet Diamonds.com. We were looking for a
name that was somewhat flexible, simple to spell and, most
important, somewhat sticky in consumers' minds. We hired a
naming firm, and "Blue Nile" tested higher [with
consumers] than any of the other names.

Entrepreneur: Do you think you're
successful?Vadon: Every day we come in here and feel like we
haven't done enough. That's part of the dysfunction of
being a good entrepreneur-you're never satisfied. I don't
think we're ever going to be done.

A trip to an animal shelter changed the lives of Jennifer Melton
and her husband, Brennan Johnson. After adopting an 8-month-old
shepherd mix, Melton discovered that the dog had severe allergies
and a very sensitive stomach. "I started making her food
because I couldn't find anything on the market, either
food-wise or treat-wise, that could satisfy all her
allergies," says Melton.

Their passion for their dog's health inspired Melton and
Johnson to create their own line of bake-at-home dog treats that
were free of the soy, corn and dairy often found in most commercial
products. They started selling the treats in 1999 and soon expanded
their offerings to include dog shampoos and conditioners, pre-made
treats and dog food. "Most of our growth and our decisions for
which area we wanted to go into have been from listening to our
customers and what they want from us," says Melton.

Selling strictly wholesale, San Luis Obispo, California-based
Cloud Star Corp. is set to hit $6 million in sales for 2003. And
with all three of their dogs having come from shelters, they
regularly donate both dog products and a portion of their profits
to shelters and humane organizations. Says Melton, "We knew
that was something we really wanted to emphasize."
-N.L.T.

Success
SecretsEntrepreneur: Did you face any skepticism when you
first brought your products to market?Jennifer Melton: Brennan and I still joke about it.
Absolutely, people thought we were crazy. One of the first calls I
made, a guy told me, "What makes your dog bone the best dog
bone out there? Everyone's making the best dog bone." I
think if you listen to what your skeptics are saying, it gives a
little bit more of a [target] in which to respond to that
skepticism. For us, it was truly having a unique product in the
[area] of allergies for dogs.

Entrepreneur: How did you start selling and
distributing your products?Brennan Johnson: We attempted to go national from the
beginning. We created databases of health-food stores, gift stores
and pet supply stores across the country and started doing targeted
mailings quarterly. And we still do mailings quarterly to a pretty
extensive database of retailers.

Entrepreneur: What would you say have been the
biggest rewards of opening Cloud Star?Melton: For me, [it's when] we get these great letters
from customers who've been using our product: "Thank you
so much. Your dog treat is the first treat my dog's been able
to have in five years." Things like that are really nice to
hear.

Attention, all gamers: The mother ship has landed. Alex Aguila
and Nelson Gonzalez aren't extraterrestrials, but the story
behind their business, Alienware Corp., is out of this world,
considering they project 2003 sales of $135 million-after starting
out in a garage with only $13,000 in 1996 and, to this day, never
taking outside financing.

A longtime gamer, Gonzalez disliked changing his computer
hardware to optimize PC systems for games. Finding no company
offering PCs designed for game enthusiasts, the IT manager decided
to use his tech skills to offer customized computers. He asked his
childhood friend Aguila to join him. "He's intelligent,
aggressive and extremely obsessive," says Gonzalez.
"That's the kind of personality I needed."

Alienware computers-often called the BMW of computers for
gamers-are sold direct and via online electronics store
Ebgames.com. With PCs resembling colorful alien heads, "ours
tend to be more mean, more aggressive," says Gonzalez.
"We introduced sexy colors in a hot-rod environment." The
alien theme is apparent: The flagship model, Area 51, and the
company's Miami headquarters, dubbed the Mother Ship, are just
a couple of examples.

Alienware plans to continue offering technology to power- and
performance-hungry gamers, while also courting the growing market
of computer users who appreciate a better-quality product.
They're taking over the PC world, one user at a time.
-A.Y.P.

Success
SecretsEntrepreneur: What is special about your PCs?Nelson Gonzalez: We assemble a machine specifically for
performance, using the best parts available. Then we tweak the
operating system so it's very vanilla, not loaded with stuff
you don't really need, but optimized for gaming and
performance. Dell recently got into this business, but we are very
competitively priced, probably less expensive. Because we're
dealing with the high end, we're able to leverage those
relationships, and now we're very comparably priced at the
higher-end ASP.

Entrepreneur: Who's your typical
customer?Gonzalez: It tends to be male, but actually the majority of
the people who buy our machines are probably wives or mothers for
men age 18 to 50. These men are professionals making over $70,000
or so and have multiple computers at home. They've bought
off-the-shelf stuff, have built their own machine, and find that we
bring a lot of value for what we give in terms of performance,
upgradability of a box and support.

Entrepreneur: How is your marketing
different?Gonzalez: We're very honest with our customers first and
foremost, so it's a completely different approach than what is
being done out there in the PC industry. If you see an
advertisement from us, you'll see a $3,000 price-tagged system.
We put down all the details of what components you're getting.
It's almost like we're selling a turnkey solution vs. a
$999 computer that will upsell you on everything else.

Entrepreneur: You haven't ever had outside
funding?Gonzalez: Our business has grown organically. We're very
proud of that accomplishment, probably that more than anything
else. It's so tough to expand operations and grow a business
organically; it takes a strong management team to do it
effectively.

Started during the Internet boom, Liquidation.com is an online
emporium where corporations sell their excess assets to the highest
bidders, typically generating higher returns than conventional
liquidation methods. Co-founders Ben Brown, Bill Angrick, and Jaime
Mateus-Tique knew from the beginning that the simplicity of their
business plan would spell success. "Sellers always have assets
to sell in our economy," says Angrick. "So we provide a
very simple business that fills that need."

It was Angrick's vision for an efficient, one-stop online
shop that moved investors in the early days. But Liquidation.com
set itself apart by avoiding the excess of other dotcoms. It was
bootstrap city-to the point that Angrick and Mateus-Tique shared a
300-square-foot studio apartment near their Washington, DC,
office.

Those days are behind them, as the trio expects $60 million in
sales this year. And revenues come not just by serving the
sellers' needs-Liquidation.com is a prime resource for smaller
start-ups to find wholesale merchandise that they can resell via
stores or online outlets like eBay. Says Angrick, "We
understand we're a service business [first] not a Web site, not
a tech company." -N.L.T.

Success
SecretsEntrepreneur: As someone who ran a dotcom throughout
the trying times of 2000-2001, what was your philosophy in terms of
getting through that time?William Angrick: It was an exceptional period, and the
assumptions in place for creating value and attracting investment
capital and being perceived as a success-those assumptions have all
changed. Back then, it was awkward to start a business in a
bootstrap fashion and then be patient and build on a small scale as
you got profitable. People required you to scale the business
rapidly to show you had market share or presence and could
discourage competitors from coming into your space. And all the
advice we got from VCs was to raise as much money as possible, grow
as fast as possible. "Don't worry about profitability;
we'll deal with that later." Well, that was bad
advice.

Entrepreneur: How did companies looking to
liquidate view you when you first started?Angrick: I think early on, most of corporate America was
circumspect about using the Internet. There were issues of trust,
quality control and whether the dotcom service provider was going
to have staying power to provide that service on a long-term
basis.

Entrepreneur: What are the reactions of the
smaller start-up companies that buy this inventory off of the
Web?Angrick: There's a constant flow of inventory coming
into our market, so there's a wide breadth for buyers, ranging
from consumer electronics, computer and technology equipment to
apparel, vehicles, and a variety of medical and electronic
equipment. This is all very relevant to our buyers. A
small-business buyer traditionally didn't have access to this
product. They couldn't call up Mr. Fortune 100 company and say,
"I want to buy your surplus." They now have a channel
where we create a very open, efficient marketplace for the buyer.
And if he's the high bidder, he gets it. It doesn't matter
if he's a large, medium or small company, so long as he meets
the terms and conditions of the sale, which is essentially paying
for the merchandise. That's a fundamental enhancement for that
marketplace. So in a symbiotic relationship of sorts, we are
facilitating entrepreneurship with small-business buyers.